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European Ponzi Goes Full Retard As EFSF Found To Monetize... Itself

Tyler Durden's picture


We have long mocked and ridiculed the Fed for being the ultimate ponzi instrument: after all, why worry, when your central bank will buy up almost three trillion in US paper in about 2 years (a very comforting fact for US politicians who never have to fear that those trillions in new porkbills, pardon fiscal stimulus programs, may end up without funding). Well, as it turns out those wily veteran bankers from across the Atlantic have just one upped America yet again. According to the Telegraph, the abysmal, and barely successful, 3 EUR billion issuance of EFSF bonds (which was originally supposed to be 10 EUR billion, on its very very gradual climb to 1 EUR trillion) had one more very curious feature to it, aside from confirming that it is Dead On Arrival as expected. It turns out that in addition to being the most convoluted and complex creation ever conceived by JPM which is advising Europe on coming up with structured finance products that are so complex nobody will ask any questions and will automatically assume someone else has done the homework, it is also the quintessential ponzi instrument. The Telegraph reports that the already reduced 3 EUR billion "target was only met after the EFSF resorted to buying up several hundred million euros worth of the bonds." You read that right: in its first bond issuance since its transformation to the European Bank/Soveriegn Bailout Swiss Army Knife, the EFSF not only failed to raise a minimum token amount, but also had to... buy its own bonds. We can assume that the money the EFSF needed to fund said purchase came from the money growing tree, as at last check the ECB was still not funding the EFSF with crisp, new zEURq.PK equivalent binary 1s and 0s. But at least we all know what happens when the global ponzi goes full retard.

More on this surreal story which will be promptly buried in the barrage of Monday headlines because an international advisor to Goldman Sachs is now in charge of Italy.

Sources said the EFSF had spent more than € 100m buying up its own bonds to help it achieve its funding target after the banks leading the deal were only able to find about €2.7bn of outside demand for the debt.


The revelation will be seen as a major failure and a worrying sign of future buyers strike after EFSF officials and their bankers had spent recent weeks travelling the world attempting to persuade key investors, including China's national wealth fund and Japanese government funds, to buy its bonds.

And just in case one monetization vertical was not enough, Europe used, well, all the other ones it could:

Other European Union funds are also understood to have supported the EFSF's bond sale. The failure of the EFSF will increase pressure on the European Central Bank to effectively become the lender of last resort for the eurozone, a move it has strongly resisted.


At a private breakfast organised by PI Capital last week, Mark Hoban, the Treasury minister, said: "What it doesn't do is provide the next stage of the solution, which is how do you stop this from happening again?" he said.


The move, by the European Investment Bank, will cause more disquiet among non-eurozone EU members who have become concerned about their growing exposure to the cost of rescuing the currency bloc.

The explanation, for anyone whose brain just exploded, is that despite the marionette rotation at the top, the math of Europe is still not only absolutely hopeless, not to mention meaningless, but somehow just got even worse, because take away the magical powers of modern finance to be one with the ponzi, and Europe would have already imploded.

It also means that our earlier observation that the EFSF is an AA+ equivalent credit instrument has to be revised: pro formaing out the ponzi, means it is at best AA if not A, and most likely D if one takes away all the magic bells and Keynesian whistles, unicorns and other end of the western financial world loopholes that modern finance is forced to resort to every single day to mask the fact that every country in the developed world is now 100% bankrupt.


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Sat, 11/12/2011 - 22:37 | Link to Comment Earl of Chiswick
Sat, 11/12/2011 - 23:02 | Link to Comment Chris Jusset
Chris Jusset's picture

I bet Charles Ponzi never imagined that he would become the role model of every central banker in the world.

Sat, 11/12/2011 - 23:11 | Link to Comment dlmaniac
dlmaniac's picture

I'll cover my monthly mortgage payment this way.

Sat, 11/12/2011 - 23:23 | Link to Comment redpill
redpill's picture

Oh, you're one of the three people still making them?

Sun, 11/13/2011 - 00:32 | Link to Comment flacon
flacon's picture

Transforming "nothing" into "something". Creation ex-nihilo. I thought only God could do that... oh... I forgot... Lord Blankfein is God's fat little cherub and can do it too. Turns out there are fat little cherubs in Europe too - just doing "God's work".

Sun, 11/13/2011 - 01:32 | Link to Comment trav7777
trav7777's picture

wtf, is the EU delusional enough to think there are actually cash size buyers out there willing to buy into a supranational CDO like the EFSF??!?  The ONLY BUYER of paper at this point is a CB.  They can't be stupid enough to think that there is more leverage out there to be had from the general economy.

Would YOU buy into a CDO composed of one nation (Germany) that has a freakin budget under control when the entire rest of the union (inc France) cheated and lied their asses off to get in?

There isn't another sovereign in the EU that won't be discovered to have done the same cashflow swaps as Italy did to cheat under the deficit tagets, besides Germany.

Sun, 11/13/2011 - 02:26 | Link to Comment sqz
sqz's picture

The move, by the European Investment Bank, will cause more disquiet among non-eurozone EU members who have become concerned about their growing exposure to the cost of rescuing the currency bloc.

Uh, woot?!

Could be a bit more specific about EIB's involvement here, if it is anything other than operational.

Sun, 11/13/2011 - 05:35 | Link to Comment French Frog
French Frog's picture

This weekend, on one side you have the Europe's supposed saviour (the EFSF) that is found to be useless and on the other hand you have Silvio resigning (which at a stroke makes all of Italy's problems disappear lol) ... as far as the money markets are concerned, this should make for a very bullish coming week.

If enough participants see/hear enough news that can 'justify' a bullish stance, then they can perpetuate the whole circus for another day/week .... For a while (forever?), it hasn't been about what IS happening (in front of you or in the background) but how to manage the illusion!

Sun, 11/13/2011 - 08:57 | Link to Comment MillionDollarBonus_
MillionDollarBonus_'s picture

It's understandable that doomer crackpots would have a tough time understanding this move by the EFSF, but in order to reach their level of intelligence you need to think outside the box. If you just think for a moment, this move makes PERFECT sense. What the EFSF has done is deliberately issue bonds in a quantity in which they did not expect to find sufficient bidders. They then buy the unsold bonds themselves to create the impression of a more successful auction. Market participants refuse to recognise the genius of the EFSF, and hence they need to be confused into believing in it for their own good.



Sun, 11/13/2011 - 10:18 | Link to Comment Dick Darlington
Dick Darlington's picture

Just when i thought that it's nearly impossible to push more shit into the world packed full of shit, here comes MDB with a huge truckload of fresh shit. I think now would be an appropriate time to raise the "full retard" card once again.

Sun, 11/13/2011 - 10:46 | Link to Comment ratso
ratso's picture

There is a difference between going broke and being worth less.  As long as a country can print money it is not officially broke - just increasing ly worth less.  Now the Eurozone on the other hand, that's a different matter....

Sun, 11/13/2011 - 12:50 | Link to Comment derek_vineyard
derek_vineyard's picture

i called my son a retard for putting carbonated soda in the freezer.....his friends mom heard me and i was arrested for child endangerment and hate crimes

Sun, 11/13/2011 - 13:37 | Link to Comment Pegasus Muse
Pegasus Muse's picture

The world financial system is constipated with fiat ponzi paper and bankster scams like an impacted colon is with shit.  It's enema time.   

So are there big leadership changes in store for Italy and Greece?  Nah.  News bosses same as the old ones:  

Global Insights
Fri, Nov 11, 2011


Sun, 11/13/2011 - 12:23 | Link to Comment jcaz
jcaz's picture

No question, MDB- you've reached a "new" level of intelligence....

Now run upstairs and tell your mommy that you're winning on this board....

Sun, 11/13/2011 - 10:47 | Link to Comment knukles
knukles's picture


Perfection is an illusion of arrogance.

Sun, 11/13/2011 - 10:56 | Link to Comment knukles
knukles's picture


Here's what let's do, MDB.

You write a check off of your very own checking account.  Write it to yourself.  Take said check and deposit it into your own checking account off of which you just wrote it.  What have you accomplished?  Nothing, except wasting paper, ink and time.

Now annonce to world that you have solved your financial problems by virtue of said activity.  What have you accomplished?
Confirmed our suspicions that you're barin-damaged. 
(Or else a paid for by fucking who knows or cares to try to sway opinion.... Well, we always need somebody to ridicule, so thanks anyway.)

And, having acted as your JP Morgan to your ESEF, you can write me a check for $1,000,000. 



Sun, 11/13/2011 - 20:25 | Link to Comment Estrella
Estrella's picture

He is good. You really do have a gift.

Sun, 11/13/2011 - 01:38 | Link to Comment Comay Mierda
Comay Mierda's picture

Twilight zone. I'm going to learn how to live by eating my own shit.

Sun, 11/13/2011 - 09:55 | Link to Comment Zero Govt
Zero Govt's picture

it's an ever decreasing circle of lower nutrient shit 

Sarkozy is full shit, Merkal is shit on toast and the British Govt wants in on all this shit just as it hits the fan

friggin clueless lot politicians

Sun, 11/13/2011 - 13:40 | Link to Comment Pinworm
Pinworm's picture

Good stuff

Sat, 11/12/2011 - 23:14 | Link to Comment redpill
redpill's picture

Biying your own bonds, how very masturbatory!

Sat, 11/12/2011 - 23:19 | Link to Comment Karl Tashjian
Karl Tashjian's picture

Self improvement is masturbation. Now self destruction...

Sun, 11/13/2011 - 10:59 | Link to Comment disabledvet
disabledvet's picture

That does sound painful.

Sun, 11/13/2011 - 01:29 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

The very meaning of circle jerk.

Sun, 11/13/2011 - 11:43 | Link to Comment Fidel Sarcastro
Fidel Sarcastro's picture

The EFSF just did a Ron Jeremy.

Sun, 11/13/2011 - 02:55 | Link to Comment Pitchman
Pitchman's picture

Chris Jusset said: "I bet Charles Ponzi never imagined that he would become the role model of every central banker in the world."

And the inevitable result:


Life After An EMP Attack: No Power, No Food, No Tr...

Sat, 11/12/2011 - 23:28 | Link to Comment RiverRoad
RiverRoad's picture

Isn't it comforting and assuring to know that JPM is doing the same advising for the EU that Goldman did for Greece?  

Sun, 11/13/2011 - 02:57 | Link to Comment Pitchman
Sat, 11/12/2011 - 23:35 | Link to Comment tmosley
tmosley's picture

And here I was hoping for a Futurama reference.

"Like I'm going to take lessons in not messing with the timeline from Mr. I'm-My-Own_Grandpa!"

Sun, 11/13/2011 - 00:00 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture



I think the whole world is going cueballs.



Sun, 11/13/2011 - 01:10 | Link to Comment phungus_mungus
phungus_mungus's picture

Just how BIG is that crack rock the EU is currently smoking? 

Sun, 11/13/2011 - 09:01 | Link to Comment midtowng
midtowng's picture

It's the final stages of a Ponzi scheme breaking down.

The thing, we are talking about what was once considered to be the 2nd world reserve currency.

This will be HUGE.

Sat, 11/12/2011 - 22:35 | Link to Comment Hansel
Hansel's picture

I thought this was most awesome when I came across it too.  With the newly installed technocrats in Italy, Greece, and at the ECB, I doubt they care that they are sniffing their own brand.

Sat, 11/12/2011 - 22:37 | Link to Comment CClarity
CClarity's picture

Agree.  The financial system has become a sham and nothing is safe.  And they did it purposefully.  But we'll find them on their private islands.  Look what is happening to "leaders" in the Middle East, North Africa, and the latest "resignations" in Greece and Italy.  Pap and Berlesque are hoping they'll be spared the gallows this way.

Sat, 11/12/2011 - 22:38 | Link to Comment Drunken Monkey
Drunken Monkey's picture

Someone explain to me again why Madoff is in prison?

Sat, 11/12/2011 - 22:41 | Link to Comment lolmao500
lolmao500's picture

He screwed some very important people. You don't do that or else you're done.

Screwing millions of little people? Sure. Screw one ``big`` shot of a few hundreds thousands or a million? You're gone.

Sat, 11/12/2011 - 22:59 | Link to Comment TheSilverJournal
TheSilverJournal's picture

I agree, Corzine will walk.

Sat, 11/12/2011 - 23:13 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

One way or another yes he will.  He can drag out the time until trial, and then Obama pardons him.  That of course assumes he makes it to trial, instead of Secretary of the Treasury.

Sun, 11/13/2011 - 06:52 | Link to Comment mind_imminst
mind_imminst's picture

Yep, Corzine will walk. The NYTimes and Obama will make sure of that. Not only will he walk, he will probably become a Senator, governor, or bank president again.

Sun, 11/13/2011 - 12:07 | Link to Comment Calmyourself
Calmyourself's picture

If there comes a reset, corzine will be jack, queen or king of spades

Sat, 11/12/2011 - 22:58 | Link to Comment Jim in MN
Jim in MN's picture

The music stopped and there weren't enough chairs.  Coulda happened to any Ponzimeister.


Tick, tock....

Sun, 11/13/2011 - 09:35 | Link to Comment kaiserhoff
kaiserhoff's picture

And will happen to them all.

Tick, tock....

Sat, 11/12/2011 - 22:40 | Link to Comment Josh Randall
Josh Randall's picture

EFSF is literally playing with themselves in front of everyone - no shame guys ?

Sat, 11/12/2011 - 22:44 | Link to Comment Savvy
Savvy's picture

ROFL!! So true.

Sat, 11/12/2011 - 23:20 | Link to Comment Karl Tashjian
Karl Tashjian's picture

These people have no shame. They're European.

Sat, 11/12/2011 - 22:44 | Link to Comment moskov
moskov's picture

EU leaders acting like Marie Antoinette in Beijing and patronizing the Chinese to give them the ''free lunch'', and threatening if you don't give us the money then your export will explode. Chinese answered: Well, F__k yeah, let it explode like your euro then. It's worth of the money. We don't care.


and they are calling China got a slap in the face by making a offer rejected by these pathetic losers? lol.... it makes my day

Sat, 11/12/2011 - 22:43 | Link to Comment Subprime JD
Subprime JD's picture

Only a fucking fool wouldn't own gold given all the monetization of debt that is taking place. And thank god this world is full of fools as this leaves more gold for us. Print away, motherfuckerz.

Sat, 11/12/2011 - 23:13 | Link to Comment philipat
philipat's picture

I predict that CB/PD will knock Gold down again in low volume trading in the Sunday overnight session.

Sat, 11/12/2011 - 23:24 | Link to Comment Subprime JD
Subprime JD's picture

I love holiday discounts

Sun, 11/13/2011 - 00:32 | Link to Comment DeadFred
DeadFred's picture

A holiday BOGO sale?

Sun, 11/13/2011 - 00:48 | Link to Comment Subprime JD
Subprime JD's picture

Us Zerohedge monkeys should put a big pool of money together, contact the squid and have them develop one of their special products where they short gold to the point where the price turns "negative." Thereby allowing the crimex to give us their gold for free.

Sun, 11/13/2011 - 06:01 | Link to Comment zhandax
zhandax's picture

Two years ago I would have accused you of being a troll.  I now realize this is not beyond the realm of possibility.

Sun, 11/13/2011 - 01:11 | Link to Comment phungus_mungus
phungus_mungus's picture



Yeah.... I think this one will be classified more as a fire sale once it all goes sideways. 

Sat, 11/12/2011 - 22:46 | Link to Comment bob_dabolina
bob_dabolina's picture

I would monetize myself if I could and all other kinds of nasty things.

Sun, 11/13/2011 - 00:37 | Link to Comment piceridu
piceridu's picture

Bobby, how do you monetize anything with a paper trading account?

Sun, 11/13/2011 - 01:19 | Link to Comment bob_dabolina
bob_dabolina's picture

You're jealous and that's cool. 

Keep going with that.

Sat, 11/12/2011 - 22:48 | Link to Comment navy62802
navy62802's picture

But the problems are fixed, right? Berlusconi and Papandreu have resigned. That's what the TV said.

Sat, 11/12/2011 - 22:51 | Link to Comment ghengis86
ghengis86's picture

If you monetize yourself, you'll go blind and get hairy palms.

And burn in hell!! (fir realzies)

Sun, 11/13/2011 - 01:15 | Link to Comment knukles
knukles's picture

Pass the Nair.  Hey, anybody seen my glasses?

Sat, 11/12/2011 - 22:59 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

You guys still don't get it.

There is no history.  There is no analysis.  There is no math.  The status quo will continue and ANYTHING that has to be done to make that so will be done.  These people are in "let's just hang on until it all gets fixed" mode.  

Worse, they're in "let's just hang on so the people don't die," mode.  The system is the only thing that feeds this many people and if it fails, people will literally die.  In other words, they've conveniently persuaded themselves that they are noble and selfless and public servants of dedication never before seen.

Stop looking for rational results.  If something is in the way, it will be eliminated.  The world will be defined by decree; not by math.

Only one thing will EVER stop this.  Oil.  Watch oil.  Nothing else truly matters.  What rate comes out of the ground is the only thing they can't define . . . and they do know it.  That's why Gadaffi was murdered.  The end from oil is close; they are desperate for a miracle.

Sat, 11/12/2011 - 23:00 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

<reminds me of Mako>  Much missed here at ZH by me.

Sun, 11/13/2011 - 00:30 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Can't print gold, neither.

Sun, 11/13/2011 - 13:00 | Link to Comment MissCellany
MissCellany's picture

Now THAT is the perfect answer to "You can't eat gold!"

Sat, 11/12/2011 - 23:04 | Link to Comment Mad Max
Mad Max's picture

Oil, viable fusion or skittles-farting unicorns.  All good options.

There are some VERY promising recent developments in solar.  Getting them into large-scale production and use before the oil runs out to do so could be the ultimate race for mankind.  We are somewhere past 11pm on the clock, and possibly closer to 11:57.

Sun, 11/13/2011 - 00:15 | Link to Comment DCFusor
DCFusor's picture

I'm an old hand on solar myself - been off the grid since '82, and on old solar tech (obviously).  The old poly silicon 14% efficient panels are fine, and robust, where the new tech tends to fail quick - some of it you just can't make both cheap and reliable - the frames alone are as costly as the rest.  My panels are Solarex, owned by Amoco at the time, now BP, who with their fantastic timing shut down the factory in MD just as they started spewing oil in the gulf - not making enough profit on them, and when you touch them it's obvious why - quality out the pitoot.  After adding panels as I could over the years, I now have WAY too much on many days, so today I took delivery of a Chevy Volt - it's bitchin too....

Won't solve trucking or farm tractors that need real power all day every day, but for me, when gas goes too high, or goes away, I'll be laughing.  I have enough spare to add some fun driving for the heck of it to what I need off my home/campus system now, and will keep "stacking" solar panels just like I do gold.  At least they do pay a dividend in something I need - power and independence from jerks who rent-seek for electricity.

Peruse this so you can be properly jealous.


Sun, 11/13/2011 - 00:26 | Link to Comment bob_dabolina
bob_dabolina's picture

You work for Obama and it is OBVIOUS. 

If solar was efficient there would BE A MARKET FOR IT. 

There is no private market for solar because solar is inneficient and the market knows that. 

Take your Volt and shove it up your ass.

Sun, 11/13/2011 - 06:47 | Link to Comment Gief Gold Plox
Gief Gold Plox's picture

It is obvious you've never taken the time to read any of DCFusor's posts or review real work he does and links to occasionally. I am therefore forced to conclude that you're an idiot.

Sun, 11/13/2011 - 12:12 | Link to Comment Sabibaby
Sabibaby's picture

Can y'all just stop taking public money and go about running your business without government handouts?

That’s all we’re asking.

Sun, 11/13/2011 - 11:17 | Link to Comment Kickaha
Kickaha's picture

There is a market for everything. 

The size of the sales in each market are dictated by whether a buyer perceives value in the goods offered at the prices offered by the sellers.  In general, those prices must be set at a level where costs are recovered, plus some profit. 

When oil and natural gas become truly scarce, prices for carbon will eventually rise to the point where solar will become a profitable business, and then maybe a solar power industry can arise independent of massive government subsidies handed out to political contributors.

Absent huge technological improvements in solar panels and batteries, my guess is the USA will first retrofit all internal combustion engines to run on natural gas and bite the bullet as far as the cost of setting up natural gas pumps everywhere.  Only when NG prices rise to the point where solar becomes cheaper will solar replaces carbon.

Let me take this moment to thank all greenies who have lost or will lose their money investing in the solar energy industry presently.  The inventions found via your bankruptcies will greatly benefit the rest of us someday.

Sun, 11/13/2011 - 01:03 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

He's either lying or lives in the 15 square miles or so on the Earth's surface that does not need either cooling or heating.

It is electric heat that makes solar power unviable.  You will NEVER take a New England home 100% off the grid with with a 100% electric house on solar.

It is air conditioning that makes solar power unviable.  You will NEVER take a Tucson house 100% off the grid with a 100% electric house on solar.

You can do it up in mountains in Arizona that have moderate temperatures year round.  You can't do it the VAST MAJORITY of places.

Sun, 11/13/2011 - 01:35 | Link to Comment Rockfish
Rockfish's picture


You will NEVER go to the moon.

I love NEVER.

Sun, 11/13/2011 - 01:44 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Read carefully about his stacking solar panels...  Maybe DCFusor has a LOT of them.  Did he write that he gets his electricity just from panels on his roof?

Sun, 11/13/2011 - 02:20 | Link to Comment BlakeFelix
BlakeFelix's picture

Eh?  Grow tree.  Burn tree.  Not exactly new technology.

Sun, 11/13/2011 - 04:29 | Link to Comment natty light
natty light's picture

Hence the end of copious air conditioning. 

Sun, 11/13/2011 - 06:51 | Link to Comment cowdiddly
cowdiddly's picture

Exactly. Turn off the freaking AC. ditch the potato chip bag and disconnect the propaganda box. You will be amazed and will not feel the least bit uncomfortable because you are unnaturally climatized. I have a 5 ton and only run it about a month and a half both winter and summer. You guys up north please disregard. that freaking cold will hurt your feelings.

Sun, 11/13/2011 - 10:20 | Link to Comment Rusticus
Rusticus's picture

Retrofitting an existing house is not cost effective, however there are passive houses in northern Europe that are entirely off grid.

Passive houses can be heated with a hair dryer and cooled with a single 5000 btu window unit.

Sun, 11/13/2011 - 20:14 | Link to Comment Cathartes Aura
Cathartes Aura's picture

Passive solar, earth bermed, straw bale, cob - there are many ways to rethink the "ticky-tacky boxes in a row" that folks are herded into, inefficient and connected to heavy heating/cooling utility bills. . .


Sun, 11/13/2011 - 10:55 | Link to Comment TJ00
TJ00's picture

The answer is to use a Geothermal heat pump powered by the solar panels.

Sun, 11/13/2011 - 11:16 | Link to Comment DarkWanderer01
DarkWanderer01's picture

Solar is viable in many parts of the world. Most of India gets 340+ days of sunshine every year. What is really needed is a smart grid. In India you could even use a solar cooker to cook 2 meals a day almost daily.

Solar won't support airconditioning and such luxuries though.

You see solar promoted in places like UK and Japan which get so little sunshine.



Sun, 11/13/2011 - 04:48 | Link to Comment BigInJapan
BigInJapan's picture

Here in northern Japan, solar is an absolute joke.
I see yuppies putting 900w of Sanyo panels (as expensive as they come) on the rooftops of houses that are under snow for four months of the year.
West facing panels, to boot.
Fucking braintrust.

Sun, 11/13/2011 - 06:55 | Link to Comment cowdiddly
cowdiddly's picture

The sun rises in the east and sets in the west. Well at least here. It seems that would be the natural orientation.

Sun, 11/13/2011 - 13:07 | Link to Comment BigInJapan
BigInJapan's picture

And presumably passes from East to West, South of where you are.

The panels I'm referring to should be oriented facing South.

Sun, 11/13/2011 - 20:16 | Link to Comment Cathartes Aura
Cathartes Aura's picture

surely the "yuppies" are the "joke" - not the panels they install incorrectly?  why diss solar??

Sun, 11/13/2011 - 01:02 | Link to Comment dolph9
dolph9's picture

More energy just lets the Ponzi continue.  It lets banksters get rich and lets niggers breed.

Fuck that!  Bring on the collapse.

Tue, 11/15/2011 - 11:42 | Link to Comment Pitchman
Pitchman's picture

Response to dolph9

Get a rope and we'll hang em.  Hey you look a little different; you first.

Sat, 11/12/2011 - 23:16 | Link to Comment Hohum
Hohum's picture

Let's see: if/when DOW is 14,000, WTI will be about $114 and Brent may be $130.  The end will be that much closer.

Sat, 11/12/2011 - 23:29 | Link to Comment TheSilverJournal
TheSilverJournal's picture

Housing is really messing them up to. 50% of mortgages are underwater and the Fed is on the hook for almost all of it. I think you have to include watch housing to your watch oil list.

And you have to include watch Italy. If Italy goes down the banks banks go down because the banks can't write off all of that debt. I agree, TPTB will do whatever's necessary and will end up bailing out Italy. But, these decisions haven't been made yet so who knows, someone could stop the Italy bailout...the chance is too big to just outright ignore.

Sun, 11/13/2011 - 00:01 | Link to Comment LeBalance
LeBalance's picture

i think You don't get it.

question: who exactly are we talking about ?? Them!

who is them and what is their favorite sport?  >> War!

how do they make their favorite game of Slaughter happen on a global scale?

let's see: 1340 (Florentine Credit snafu)> 1390 no trade > Black Death!  (watta partie!)

1922-3 > Weimar > Adolf > Ohhh baby!


tea leaves!  read them?  Them!  lol!

Sun, 11/13/2011 - 00:36 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The US will ration oil to the serfs while using the House of Saud's oil to run the military?  People don't even want anymore war.  Unless there is a false flag of epic proportions, war ain't going to happen, and if they try another false flag, they may just finally get caught now that everyone knows about them, flase flags.

I think they are pretty much screwed, not that they won't try something.

Sun, 11/13/2011 - 01:05 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Long term, big scale war is hard to run at $110 Brent.  Iraq wound down as oil price went up.  

You probably could not fight a World War II level oil consumption war any longer.

Sun, 11/13/2011 - 01:13 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Exactly.  Let's take a look at history.  Germany.  Big army, big plans, no oil.  They lost quickly once Exxon stopped supplying them.  The US will sufer the same fate, which is why, I do not think we will see WWIII happen right now.  It would need to have the backing of the American people, and Americans are sick of war.  I could be wrong.

Sun, 11/13/2011 - 01:20 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

7 Billion people demand a lot of oil.  They won't volunteer to starve so someone can drive 4 divisions of 1 mile per gallon armor into another country for several years.

Which, of course, makes use of nuclear weapons far more likely.  They are cheaper.

Sun, 11/13/2011 - 01:45 | Link to Comment trav7777
trav7777's picture

I wrote about this like 5 years ago.  WW3 will happen but at some point, the armies will be forced to power down and disengage.  There simply won't be enough supply to sustain a global engagement.

And with these big oceans, that means no more empire, no more global reach.  The world gets bigger.  The war will be mercifully short, maybe the button gets pushed by someone in a limited way but who knows.

7 Billion don't demand that much when you look at wiki's per capita oil consumption rankings.  Wealth=oil consumption per capita.  Period.  2.5 billion dots and chinks are consuming vastly less combined than we do as a nation of 300M. 

The only sustainable war in the future won't include that much armor.  Gonna hafta be a lot of remote control planes built cheap and running with propellers or something.  If you have nuclear ships, you'll have a leg up, but there simply isn't going to be the fuel supply to mount a war to...get more fuel.  This is what madmax was ABOUT...the consumption of massive amounts of gasoline to try to procure more gasoline in order to go back 'round the circle.

Sun, 11/13/2011 - 05:12 | Link to Comment bob_dabolina
bob_dabolina's picture

Shut up cunt. 

You are a fear baby.

Sun, 11/13/2011 - 00:17 | Link to Comment Newager23
Newager23's picture

I'm a big peak oil guy, but I think it is bonds that we need to watch. The problem is debt right now and bonds ARE the debt market. A small meltdown in bonds will reverberate throughout the derivatives markets. We are getting close to a liquidity crisis much like 2008. And it will be default/bankruptcy that sets it off. Consider it another black swan event that is coming.

Oil IS a huge looming problem. The problem is the decline rate, which few are aware of. We have a 5% decline rate at existing fields. At the current production rate of about 73 mbd (million barrels day) of CRUDE oil, that is about 4 million barrels of new oil we have to bring on production in 2012 just to maintain the current production rate. The problem is we don't have that much new oil production for 2012. In other words, we have a supply problem in 2012. It won't be severe and perhaps barely noticeable. However, once we get to 2013 or 2014 it will become noticeable and prices will start heading higher.

Once we get to 2015 we have a huge enery crisis. I thought this energy crisis would hit in 2012, but then the economy slowed in 2008 and that delayed the crisis. But it is getting very close, only three years away at my projections.

But the energy crisis is secondary to the debt crisis. The energy crisis is like God's wildcard to make sure the debt crisis is not resolved. What we have today is a perfect storm for a revolution of sorts. Expect change, dramatic, revolutionary change. And it could begin next year.

So, what do we do? My recommendation is to buy gold and silver related assets. Physical of course is the safest way to go. Stocks are risky, but have high upside potential. If you do want stocks, then ETFs are nice way to go, such as GDXJ and SIL. I also like CEF and SIVR for bullion ETFs.


Sun, 11/13/2011 - 00:39 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

2008 did not delay the crisis.  You are missing your own point!  The liquidity problem caused oil majors not to be able to fund their own projects.  Oil went offline.  Now the Majors are scrambling, and liquidity is getting crushed again.  The problem is oil, and economics, and combined they are causing a world of danger.

Sun, 11/13/2011 - 01:08 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

You can't interlace fingers behind head with an oil portfolio and wait to get rich because OIL IS EVERYTHING.

Oil issues crush the economy.  It takes down GDP.  GDP smash reduces oil consumption and presto, down goes the price, overnight when you can't trade.

This is not about trading.  This is about dying.  It's not about finance.  It's about survival.



Sun, 11/13/2011 - 01:47 | Link to Comment trav7777
trav7777's picture

the energy crisis IS the debt crisis!

Debt is a claim upon future growth...that is what the interest is!  Oil depletion and production decline = contraction, not growth.

Sun, 11/13/2011 - 02:07 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Yup. Hence biflation. You got simultaneous debt/monetary expansion and resource/input contraction. That locks you into a vicious cycle since only monetary expansion can pay down debt. 

Sun, 11/13/2011 - 04:28 | Link to Comment Max Fischer
Max Fischer's picture




Wow!  That's extremely naive and narrow-minded.  Classic problem with Peak-Oilers... no matter what the conversation, they'll pivot everything to rates of extraction and production..... every single conversation about anything having to do with economics.  Annoying!  

This particular debt crisis was NOT the result of the compound interest function running faster than rates of oil extraction, or any threat thereof. You've got your eye on the wrong ball.  This debt crisis is about GREED, pure and simple.....taking one dollar of debt and - like Jesus changing blood into wine - morphing that debt into 40 dollars of "money" in an ever increasing pyramid of debt. That, coupled with a country full of consumer zombies who continued to feed the Wall Street securitization conveyor belt with ever more debt. Sprinkle in a few quadrillion in blow-up derivatives into the mix, too.  Take that volatile, manufactured franken-ponzi economy and place it in an environment of INCREASING rates, and.....viola!  Implosion of the century! That's it.   

The "financialization" of our economy was NOT a replacement for missing oil per capita. It was borne from four things: pure greed, creative financial engineering, the dismantling of regulation which began with Reagan and went full retard by the Bush II....... and the recognition that usury is far easier, cheaper, profitable and ASSURED than trying to invent the next iPhone or Prius.  Why do you think GM started originating mortgages? Because of Peak Oil?  No!  Because it's just fucking easier than paying over-zealous union thugs three times the income of their Japanese counterparts to make stupid Pontiac Azteks that no one wants. That's why.  It has nothing to do with your peak energy from the early 70's. 

There is a point to be made about rates of extraction, but this debt crisis has NOTHING to do with it.

Max Fischer, Civis Mundi



Sun, 11/13/2011 - 11:02 | Link to Comment Bolweevil
Bolweevil's picture

Check out the brain on Max.

Sun, 11/13/2011 - 11:24 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

You're simply wrong.

The engine doesn't run without fuel.  The worshippers at the altar of economics and finance can't accept that those are not sciences, or even disciplines.  They are, at most, flawed measurements of metaphorical RPMs of that engine.

When the RPMs could not be maintained, leverage was used in an attempt to replace fuel.  Like gearing down on the transmission to climb a hill.

Those mortgages would have been paid had not oil's 2008 spike taken money out of pockets.  It was headed up even before then.  Oil was $22 in 2000.

Greed is not new.  Greed has always been around.  It didn't collapse the system until oil scarcity pulled away its 20th century backstop.

Sun, 11/13/2011 - 03:09 | Link to Comment Tom Green Swedish
Tom Green Swedish's picture

True Cost of Oil at $60 per barrel - $26 bucks a gallon (Plenty of hidden costs going on).


The true cost of oil to the US taxpayer Including all of the following aspects to the price the individual US consumer pays at the pump makes the cost of a gallon of imported gas approximately $26 dollars. This amounts to about $15,400 per year for the average car in the US, or 70% of the median household income given 2.3 cars per household. The true cost of importing oil to the US includes the following aspects:

The cost of the oil ($2.50)

Oil-related defense expenditures ($3.79)

The loss of domestic employment and related economic activity due to cash outflow for oil ($3.23)

The reduction in investment capital ($10.85)

The loss of local, state and federal tax revenues ($1.18)

The economic toll periodic oil supply disruptions impose on the domestic economy ($3.65)

Federal subsidies for oil & gas industry ($0.69)

The market cost of carbon ($0.18)


Pricing shown per US tax payer; assumes $60 per barrel of oil and $20 per ton of CO2 Source: Testimony of Milton R. Copulos, President, National Defense Council Foundation, before the Senate Foreign Relations Committee, March 30, 2006; IMF, 2008; EIA; CleanTech Group, 2007; US Census Bureau; Experian Automotive; Paper presented to Congressional staff members by NDCF President Milt Copulos, January 8, 2007

Sun, 11/13/2011 - 15:35 | Link to Comment TheSilverJournal
TheSilverJournal's picture

Yeah, you got to watch the bond prices too, but the government can monetize the debt to keep yields low. The government can't print oil. The inflation caused by debt monetization and low rates is seen in oil prices. When the yield on the 10 year hits over. When oil hits $ over. If Italy over. 

Sun, 11/13/2011 - 00:33 | Link to Comment DeadFred
DeadFred's picture

Maybe they need to invade someplace else? I wonder where...

Sun, 11/13/2011 - 10:30 | Link to Comment Everyman
Everyman's picture

Like your take Crash, but there ARE two more variables that would change the current "Status Quo".  One is open and dangerous revolt.  You say that if anything changes people die?  Well, people ARE DYING because of inflation, the austerity changes, etc., and people get VERY VERY mad, only takes a few nutcases for a revolt, (or a few principled men).

The other is complete meltdown.  Why work, pay, produce, when it is all for naught?  In DFW they finally got around to the house squatters, and are evicting them, big time.

I urge all to read these two articles, it is about the entire planet sick of bankers and the political so called leaders.  They are the proble, and people are getting ready to change things:

31 Year Old Vetern writes:


"Is There No Shame"?  From Wall Street, to Penn State to the Catholic Church.


This is the "Leadership Crises" we have.  For another good read check out "American Purgatory" on Google.


Sun, 11/13/2011 - 12:12 | Link to Comment Calmyourself
Calmyourself's picture

Oil and through oil or lack there of, hunger.  Hunger and only hunger will break the ponzi no law, contract or national pride will stop this only hunger.

Sat, 11/12/2011 - 22:57 | Link to Comment rahbii
rahbii's picture

SPY should be up 100 on monday mornin.  

Sat, 11/12/2011 - 22:57 | Link to Comment SunBlaster
SunBlaster's picture

Only 997 billion away from 1 trillion, can't be that bad!

Sat, 11/12/2011 - 22:58 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Why don't they just admit defeat and let the ECB print already.  Then we'll have some fireworks.  This is all getting old, the bobbing and weaving, hemming and hawwing...  That looks to be what is going to happen anyway.  So get on it Europe!

Sat, 11/12/2011 - 23:00 | Link to Comment Jim in MN
Jim in MN's picture

'Admit defeat' is not in the slide deck that Goldman left them.

'Smile evilly in the face of defeat' is.

Sat, 11/12/2011 - 23:02 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

The Squid Goldman with its tentacles everywhere...

Sun, 11/13/2011 - 00:39 | Link to Comment DeadFred
DeadFred's picture

I wonder if Tyler dug just a bit deeper would he find they printed the money they used to buy the debt to leverage their money so they so they can buy the debt they need to buy so more debt can be sold?

Sat, 11/12/2011 - 23:24 | Link to Comment bob_dabolina
bob_dabolina's picture

Jim, what's your view on Fukushima? I've heard a lot of conflicting reports. 

Yourself and Aristarchan always had the best info. 

Sat, 11/12/2011 - 23:57 | Link to Comment Jim in MN
Jim in MN's picture

They blew about a Chernobyl's worth of radionuclides into the air and ocean, according to the latest independent research.  They are 'storing' several more Chernobyls' worth in the on-site water.  And the slow process of entropy continues to erode all the systems there. 

Fukushima City, pop. 300,000, is washing over 100,000 homes because evacuation level contamination was discovered (months later, not by the government) and no one in Tokyo will help them or admit that a large city on the main arterial highway to northern Japan is irradiated and should be evacuated.  Imagine they come and spray your house down, tell you your kids might or might not be fine, see you, the end.

Kids closer in are showing retarded growth rates, like one third of average growth for their ages.  It is all very sad.  Radioactive sludge in Tokyo Bay.  Mushrooms eaten in restaurants.  It goes on.  Every week something new. 

For my limited professional understanding, although I have done a lot of cost-benefit and seen a lot of epidemiological studies of health impacts, it's pretty clear we're talking serious long term health impacts.  Thousands of fatalities would be my ballpark. 

So let's pray for no more bad events or screwups, and just let the enormity of it sink in. No one wants to admit we just saw the beginning of the world's worst nuclear disaster.  Anyone who looks at it carefully has to say it actually is.  And that's if it doesn't get any worse.  Is it stable?  Hell no it's not stable.  They are still in 'spray and pray' mode at the site.

Sun, 11/13/2011 - 00:19 | Link to Comment my puppy for prez
my puppy for prez's picture

And it is washing all over the world, as well.  The whole world is getting more "glowing" everyday.  We are screwed!

Sun, 11/13/2011 - 00:42 | Link to Comment bob_dabolina
bob_dabolina's picture

Thank you for the response. 

I have seen things like one eyed albino sharks showing up in the Pacific

Do you think this could be attributed to the Fukushima disaster and do you think we will start seeing things like this (god forbid) in humans going forward?


Sun, 11/13/2011 - 00:46 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Of course we will, Bob.  This is the worst nuclear disaster ever.  There will be no one living in the Fukishima area, maybe even Toyko, in five years.

Sun, 11/13/2011 - 00:52 | Link to Comment bob_dabolina
bob_dabolina's picture

It is so devastaing to not only Japan but to the entire world. 

It's a step back for humanity. 

I would still like to hear from Jim.

Sun, 11/13/2011 - 01:49 | Link to Comment trav7777
trav7777's picture

nah.  And no one-eyed albino zombies

Sun, 11/13/2011 - 02:20 | Link to Comment bob_dabolina
bob_dabolina's picture

There she is.

What's your report?

Sun, 11/13/2011 - 02:46 | Link to Comment Jim in MN
Jim in MN's picture

There is a lot of nasty crap in the oceans.  Personally I did look into the currents and dispersion off the coast of's very very complicated and impossible to pin down, one has to work in probabilities.  There are plumes, and concentrations for a while, and ocean floor deposition that can last.  I think of it as just more loading on top of the nasties already there.  One shark, a few, you'll never know.  Maybe they bred in the Bikini Atoll.  Maybe their parent frolicked in the Great Garbage Gyre.  Maybe they followed a container ship that dropped used American batteries over the side on the way to the Phillipines (mercury 'disposal').  Or maybe the Good Lord decided to create some more 'sports' because that's just how He rolls.

You know, the Minimata and Bhopal tragedies weren't nuclear....plenty of ways to mutate the cat.

Sun, 11/13/2011 - 03:11 | Link to Comment bob_dabolina
bob_dabolina's picture

Astute analysis. 

Thank you. 

Sun, 11/13/2011 - 17:58 | Link to Comment d_senti
d_senti's picture

I would verymuch like it if you and/or aristarchan could give us weekly updates on the situation in nuclear, Fukushima and otherwise. If you asked Tyler to be a contributor I bet he'd let you. Thanks for the info.

Sat, 11/12/2011 - 23:02 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Because it is such a profoundly delicate thing.

Remember, if you print money, overtly and in huge amounts, its value will erode/dilute vs other country currencies.  A falling Euro undoes their entire approach.  It would do to equities what we have seen it do.

So when they print it has to be verrrrry quiet and verrrrrry slow and verrrry obscure.  The challenge is . . . that may not be enough.

Sat, 11/12/2011 - 23:14 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

An interesting take.  Print too fast, watch everything tank.  Print too slow, watch everything tank.  Keep it all under the covers, buy some time.


Excellent comment!

Sun, 11/13/2011 - 11:35 | Link to Comment Kickaha
Kickaha's picture

Money supplies erode due to credit default? Just print an equal amount to restore something that looks like equilibrium. 

The beauty of this plan is that you can print it and then give it to your buddies in secret.  It also helps if you can pick and choose who suffers the economic losses when the defaults occurs. 

If you can control the pace of the defaults, you can rinse, wash, repeat indefinitely.

Eventually, you and your buddies end up owning everything, if the victims of the scheme don't figure it out and kill you first.


Sat, 11/12/2011 - 23:14 | Link to Comment existentialangster
existentialangster's picture

Excellent point Crashisoptimistic!

If I have you right, you mean that if they print too much money too fast, it will cause massive devaluation of the currency which will scare off investors who don't want to invest in a rapidly devaluing currency, right?  But if they don't print fast enough, the soveign debt crisis may get worse and crash the Euro economies.

So they have to do it "just right" to somehow still print but not so fast that they will devalue the Euro too fast and spook investors, but fast enough to start dousing the debt fire.  But, as you say, a "just right" speed of printing may very well not exist.

Do I have you right?  I'm just a non-finance guy trying to figure out the vertiginous illogic (and hilarity!) of this mess.

Thanks again!

Sun, 11/13/2011 - 00:47 | Link to Comment anonnn
anonnn's picture

Vertigo induced by Bernays* mind control by ThoseWhoMustBeObeyed.

* E L Bernays, master of mind-control via propaganda [lived to 104, died 1995] .

Sun, 11/13/2011 - 01:20 | Link to Comment Antifaschistische
Antifaschistische's picture

I'll + Mr. CrashO also.   But keep in mind, what CrashO has described is the technique used by ALL successful counterfeiters.  Print to little and...what's the purpose.   Print too much and you leave too many breadcrumbs to your printshop.

Our Central Bankers are only certified counterfeiters.   The ECB seems to have a slight semblance of awareness and respect for their currency.   Not so for the Fed.

Sun, 11/13/2011 - 01:35 | Link to Comment PaJoad
PaJoad's picture

Goldilocks printing?!

Sun, 11/13/2011 - 04:52 | Link to Comment natty light
natty light's picture

Goldilocks monetization.

Sat, 11/12/2011 - 23:32 | Link to Comment SofaPapa
SofaPapa's picture

Yet another thumbs up for this comment, CisO.  You have clarified a thought that has been on the edge of my mind for a couple of months now but I couldn't put my finger on.  Nail on the head here.  They've pulled this off so far for three years.  What are the odds they make it to four?

Sat, 11/12/2011 - 23:51 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

They print or they default.  They can do neither at full focus.

They defaulted Greece 28%.  Partial default, because that was all that was even remotely acceptable.

They'll print the same way.  Partial.  Minimize the risk of dilution. Quietly, under concealment, and try like hell to unprint on Fridays so the Monday ECB report isn't completely insane.

The report due Monday of how much the ECB printed to buy Italian bonds has already been undercut.  Like so:

If the amount the ECB printed to buy Italian bonds is extremely large, that means there were no other buyers (bearish for those bonds) but it also means the ECB was not messing around and made a huge commitment to the concept (bullish, sort of).  

And vice versa, if the amount reported is small, it means there were other buyers for those bonds (bullish), but it also means the ECB was tentative and is not prepared to commit large amounts to this concept (bearish).


Sun, 11/13/2011 - 00:57 | Link to Comment Raymond Reason
Raymond Reason's picture

A small country like Ukraine doesn't have the luxury of printing discretely.  Any fluctuations in money supply is immediately obvious to the population via the currency exchange booths on every corner.  USD and Euro provide benchmarks.  Granted they are moving benchmarks, but benchmarks nonetheless.  Political risk allows them to print no faster than the bigshots. The Euro and USD really have only one another as a report card.  And so with a little coordination, discretion is possible.  Of course commodities rat them out eventually. 

Sun, 11/13/2011 - 01:04 | Link to Comment anonnn
anonnn's picture

Recent Catherine Fitts [i'view on Max Kaiser's RT video] noted that the runaway financial "craziness" seemed to arise with creation of CIA and "Black Budgets" after WW2.

The raising of Gargantuan sums for global operations, with no transparency via legal-or-not secrecy, needed/needs a suitable cover until the desired results were either accomplished or unstoppable.

She was dazzled by the flimflam she observed since serving at Dept Health Ed And Welfare under Kemp...and tried to correct matters to no avail. [Reminiscent of Brooksley Born, Wlliam Black, et al].

Sun, 11/13/2011 - 02:32 | Link to Comment Pitchman
Pitchman's picture

anonnn Said:

"Recent Catherine Fitts noted that the runaway financial "craziness" seemed to arise with creation of CIA and "Black Budgets" after WW2."

"You have a system that's not being run to be productive as an economy or healthy as an economy.  Its being run to centralize control." - Cathrine Austin Fitts

I did a post featuring a fascinating interview on corruption with her.  If you're interested in the depth of the Rabbit Hole and the psychopaths within, see the "Dillon Reed and Company: And the Aristocracy of Stock Profits" link at the bottom of: The Looting of America: Happy Labor Day

- the Dillon Reed piece goes as far as to like to articles abt Bush Sr and and boy escorts visiting the White House. 




Money Power And The Central Bank: Life Is But A MEME



Based on Ponzi dynamics, credit expansions and speculative manias are naturally self-limiting. Credit expansions expand exponentially until the debt they generate can no longer be serviced and the greatest fool has committed himself to the exhausted trend, and no one remains to push prices up further.

Central Banks, Bubbles And The Coming Unwind


Sun, 11/13/2011 - 16:41 | Link to Comment anonnn
anonnn's picture

Oops! Post above should read "under Kemp at HUD". [Housing & Urban Development]

Sun, 11/13/2011 - 00:20 | Link to Comment DCFusor
DCFusor's picture

Concur, Crash.  That's the deal.  And at some point, they'll probalby say "we'd have gotten away with it if not for those pesky kids on ZH".  Because anything but slow, universal theft via inflation would set precedents that hurt TPTB, instead of just everybody.  You know, like calling for real haircuts, or some kind of debt jubiliee and letting the chips fall where they may.  Hell, even if you thought that was OK, it'd be one hell of a job to figure out how to only screw the "bad guys" and not just everybody.  I've given this some thought and I've not come up with a good one yet.

Sun, 11/13/2011 - 01:09 | Link to Comment existentialangster
existentialangster's picture

Awesome.  Totally agree DC and Crash.  It's all about how smart the corrupt PhDs in Europe (and Washington!) are in calibrating the printing speed to find that right balance where the whole thing doesn't crash either by escalating debt or hyperinflation, either of which would spell disaster for TPTB's Ponzi.  I will say one thing for these guys: they sure are magnificent bastards; I must admit even I have a grudging respect for how diabolically brilliant they are at keeping this Ponzi going for so long.  Just IMAGINE the mind-bogglingly complex mental calculus those math and econ PhDs must use to find the printing speed "sweet spot" and keep the Ponzi train on the track.  Amazing.

This simple theory of Crash's really goes a long way in explaining this many year-long slog/malaise we're in and how no cataclysmic events really seem to be happening (yet).  The West just seems frozen in corruption and debt.  And that's exactly how TPTB want it. 

Only question that remains: how long can TPTB keep the printing balancing act going?  It can't go on forever -- nobody is that smart.  Nobody can tapdance on this landmine forever, considering all the chaotic variables of world markets.

Tick tock...

Sun, 11/13/2011 - 01:26 | Link to Comment Global Hunter
Global Hunter's picture

and all this volatility we now have and 10 sigma moves are the valves popping off.

Sun, 11/13/2011 - 01:51 | Link to Comment trav7777
trav7777's picture's actually not that hard.

You print the missing interest, aka, the credit growth that didn't happen but needed to.  You have no growth but eventually, the entire credit base gets replaced with printed money.

They can just flatline the Z1 with a print operation.  It can run for decades this way with a slow erosion.

Sun, 11/13/2011 - 01:59 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

And where do you get the leverage to print the growth?  Where is the economic leverage?


Sun, 11/13/2011 - 02:08 | Link to Comment Max Fischer
Max Fischer's picture



No, Trav, don't be an idiot.

They simply roll all debt into short term maturities which pay virtually no coupon. Currently, everything maturing in less than 7 years pays <1%. Then you transfer as much debt as possible (especially the longer maturity shit) to the Federal Reserve's balance sheet and rebate the money back to the Treasury at year end.  By doing this, you cheat the compound interest function which would have eventually gobbled them up. 

Max Fischer, Civis Mundi



Sun, 11/13/2011 - 08:26 | Link to Comment Everybodys All ...
Everybodys All American's picture

That works just fine until now one else wants to buy the new issued debt. Fools will only buy the new issued debt with the low yield and high risk. Then what? Rates will be forced to rise and the whole scheme will be exposed. The bond markets will implode first and it will necessitate a major reset of the entire financial system.

Sun, 11/13/2011 - 02:17 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Surprised they're only figuring it out now. Surreptitious printing has been the name of the game since [anic conditions ended in 09. Of course. But the dark truth is that there is no way to prevent even slow and calibrated printing from creeping in and slowly causing inflation after exiting the financial complex. Meanwhile that has a negative effect on buying power

Sat, 11/12/2011 - 22:59 | Link to Comment DogSlime
DogSlime's picture

Snake eating its own tail.

Sat, 11/12/2011 - 23:40 | Link to Comment Anomalous Howard
Anomalous Howard's picture

while hoisting itself on its own retard

Sat, 11/12/2011 - 23:01 | Link to Comment Reese Bobby
Reese Bobby's picture

Sometimes I worry that Mario Draghi and I are the only ones who understand MMT.

Sat, 11/12/2011 - 23:24 | Link to Comment Tyler Durden
Tyler Durden's picture

Does one of the Ms stand for Magical?

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